Universal Life | Flexibility

Universal Life

Universal Life Insurance was developed to be flexible and yet provide protection that can last a lifetime.

A Universal Life insurance policy allows you to change, within limits, the death benefit and the amount of your premium payments. You can increase or decrease the death benefit to match your needs. Increasing your coverage may require proving that your health is good and may necessitate increasing the premiums.

Within guidelines set in the policy, you control the amount and frequency of payments. You have the option to:

Increase the premium

Contribute a lump sum

Reduce the premium

Suspend premium payments

If premiums are insufficient to maintain a positive cash value, your policy may lapse. It is important to monitor projections of your policy’s growth so your cash value remains positive. If your cash value gets low at older ages it is very expensive to maintain the policy. Avoid this situation if at all possible.

Universal life earned a black eye of sorts because many policies sold years ago had insufficient cash values to maintain coverage as the insured’s got older. To correct this issue many companies now offer an extended no lapse guarantee.

No Lapse Guarantee

The Extended No Lapse Guarantee provides an important guarantee that can ensure your coverage will continue up until a specified age, even to age 120.

The guarantee provisions vary from company to company. But generally, the extended no lapse guarantees state that if specified premiums are paid on time, your policy will not lapse even if the cash value is zero.

The no lapse guarantee premium is usually less than a whole life premium of the same face amount.

If you want lifetime life insurance and do not care about building cash values, extended no lapse guarantee universal life deserves a look.

When you are purchasing a policy with an extended no lapse guarantee just be sure you understand how the guarantee functions.